Souvenir Publications, Incorporated

July 10, 2008 BIR RULING [DA-(VAT-002) 026-08] Section 109 (R); BIR Ruling No. DA-149-2007 Souvenir Publications, Incorporated 942 Del Monte Avenue Quezon City Attention: Mr. Roland R. Robles Publisher S i r : This refers to your letter dated May 12, 2008 requesting for a ruling exempting Souvenir Publications, Incorporated from the payment of value-added tax (VAT) on its business of publishing educational textbooks, workbooks and supplementary reading materials. Documents show that Souvenir Publications, Incorporated is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. ASO92000526 issued on January 27, 1992. Its primary purpose is "to carry on business as proprietors and publishers of newspapers, journals, magazines, books and other literary works and undertakings, and also to carry on business as printers, booksellers, bookbinders, paper makers, stationers, engraver, photographers, photographic printers, stereotypers, electro-typers, lithographers, machinist, silkscreeners, or any other business or manufacture that may seem expedient". In reply, please be informed that Section 109 (R) [then Section 109 (y)] of the Tax Code of 1997 as amended by Republic Act No. 9337 provides, viz.: "SEC. 109. Exempt Transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: EScAHT xxx xxx xxx (R) Sale, importation, printing or publication of books and any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements; xxx xxx xxx" In view of the foregoing, Souvenir Publications, Incorporated is exempt from VAT on its business of publishing educational textbooks, workbooks and supplementary reading materials pursuant to Section 109 of the Tax Code of 1997, as amended. However, Souvenir Publications, Incorporated is not exempt from the VAT that is passed on to it in its purchase of materials in furtherance of its business. As a final purchaser, it pays the VAT not as a tax but as part of the cost of goods/materials it purchase from the seller/supplier. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service